Foreign National Mortgages: A Guide For International Real Estate Investors in Pennsylvania

Mortgage eligibility criteria for foreign nationals

When applying for a real estate investment loan in Pennsylvania as a foreign national, it’s important to understand that every lender has their own underwriting criteria. As such, some lenders are more favorable to international investors than others. 

You should know about key themes in the requirements set by most lenders. Below, we break down the different requirements for foreign nationals with most lenders compared to Waltz, a foreign national-friendly lender:

1. Proof of income

Most lenders: As a general rule of thumb, income generated in the United States is less scrutinized than money from other countries. Lenders require proof of income earned in the United States or an extremely detailed history of your finances in your home country. This can include salary (W2) statements, business revenue, bank records (maybe even requiring a U.S. bank), or other forms of income documentation. 

Waltz: While Waltz is obligated to review your income in the United States and abroad, we do so on a daily basis with our customers. This helps us request the right documents and ask the right questions upfront to expedite the process. 

In addition, the mortgage options we offer focus on the potential income generated by the rental property you want to buy more so than your personal finances. While that is still important, it’s not the only consideration. 

2. Down payment

Most lenders: Given the additional requirements for foreign nationals in search of investment property mortgages, 50% of international investors have opted to pay cash to avoid borrowing altogether. However, the lenders that do make it possible for you to get a loan will likely request a higher down payment between 30% on the low end and as much as 50% on the high end. There may also be reserve requirements when getting a loan as well. For example a lender may require a certain amount of additional funds in your bank account to account for rental property vacancy.

Waltz: We typically require a 30% down payment, however in some instances it can be as low as 25%. Depending on your financial situation and other property considerations, there may not be a reserve requirement.³

3. Identification and residency

Most lenders: Proof of identification will be required and you will also need to provide your address. Depending on your residency status, there might be certain primary or second home loans available to you. In terms of investment property loans, lenders will likely request that your loan be taken out under an American LLC with you as a personal guarantor on the loan.

Waltz: We verify your identity using a passport from your country of origin, even if that’s outside of the United States! Since we focus on investment property loans, we also require mortgages in the name of an LLC. 

Here’s the difference: our Investor Toolkit comes with an LLC and U.S. bank account²– that way, you don’t have to worry about the logistics.

4. Creditworthiness

Most lenders: It’s commonplace for lenders to require a minimum credit score– some go as low as 640, but this varies. If you don’t have an American FICO score, most lenders will find it difficult to give you a mortgage as a foreign investor.

Waltz: Investors are not required to have a U.S. credit score. Instead, alternative credit checks may be done using international credit histories or asset-based evaluations. 

Meeting these requirements can help you secure a mortgage as a foreign national investing in Pennsylvania. Remember to always compare lenders to choose what’s best for your situation!

Types of properties available for purchase in Pennsylvania

International investors in Pennsylvania have access to various property types when securing a mortgage such as a DSCR loan. Here are the most common options:

• Single family properties: These are designed for one family to live in (hence the name). They are standalone structures, meaning they don’t share walls with other houses. They are popular among buyers looking for a long-term investment, as they often appreciate in value at faster rates than other property types over time.
  
  
• Condos (not a co-op): Condominiums or condos consist of individual units within a larger building or complex. Each unit is owned separately, but is required to follow the rules of an HOA (homeowner’s association).  Some condos include amenities gyms and pools that are shared among all residents. Condos typically offer more straightforward financing options compared to cooperative housing, making them an attractive choice for buyers. They are especially sought after in urban settings, where space is limited and amenities are highly valued.
  
  
• Townhomes: Multi-level homes that share walls with neighboring units. Townhomes are similar to condos in many ways but are often perceived to offer more privacy. They are appealing to families and long-term renters.
  
  
• Planned unit developments (PUD): Communities that offer shared amenities, where owners have their own units and a share in common spaces. PUDs blend the benefits of private ownership with a sense of community living.
  
  
• 2-4 Unit multi-families: These properties have separate rental units within one building. They often provide higher cash flow than a single unit, as they can rent out each unit to different tenants. This setup allows for consistent cash flow and reduces risk, since multiple units can help cover expenses if one is vacant.

These diverse property options make Pennsylvania real estate investment particularly attractive for foreign nationals looking to expand their portfolios in the U.S.

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